UK economy 'may need more stimulus'

16 November 2010

Martin Weale, a member of the Bank of England's Monetary Policy Committee (MPC) has suggested that the British economy may need further monetary stimulus to boost growth.

Speaking at a Department for Business, Innovation and Skills conference, Mr Weale warned of the consequences of high unemployment and observed that some businesses have struggled to obtain capital from banks following the recession.

"It would be right for the [MPC] to do what it could to stimulate the economy further, provided that such ... stimulus were consistent with meeting the inflation target," he told attendees.

Mr Weale expressed concern at the current rate of inflation in Britain - which remained above the Bank's stated target of two per cent last month - and questioned whether fresh quantitative easing would make the situation more precarious.

In his letter to the chancellor, governor Mervyn King claimed that inflation is likely to remain high throughout 2011 because of the impending hike in VAT.